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EU Drops Plan to Levy Tech Giants Amid G20 Global Corporate Tax Deal

Proposal shelved after Washington urges bloc’s executive not to cloud agreement struck in Venice over the weekend

 

(AF) The European Union’s controversial plan to clamp down on tech giants’ tax strategies has been dropped.

The bloc’s executive, the European Commission, said Monday it had shelved the idea because it might have an impact on the G20’s hopes of creating a minimum global corporate tax rate.

After an “extraordinary” breakthrough at G20 talks on Saturday, “we have decided to put on hold our work on a proposal for a digital levy”, an EU spokesman said.

The move comes a day after Washington asked Brussels to delay the digital tax, and has been long opposed by tech giants such as Google and Apple, which criticised the proposal.

Meeting in Venice, G20 finance ministers on Saturday endorsed a plan agreed by 132 countries to overhaul the way multinational companies, including US digital giants, are taxed.

October Deal

The G20 called on negotiators to swiftly address the remaining issues and finalise the agreement by October.

They approved the result of negotiations at the Organisation for Economic Cooperation and Development (OECD) for a global minimum corporate tax rate of at least 15 percent, and to allow nations to tax a share of the profits of the world’s biggest companies regardless of where they are headquartered.

The European Commission has insisted its new levy plan, that was due to be unveiled later this month, would conform with whatever is agreed at the OECD and would hit thousands of companies, including European ones.

Money raised from the digital tax is intended to help pay for the bloc’s 750-billion-euro post-pandemic recovery plan.

Three EU countries — including Ireland, which has become a European base for a raft of US companies thanks to low tax rates — have yet to sign up to the OECD agreement.

Also on AF: Beijing signs up to global tax deal that could bring in $150bn annually

Mark McCord

Mark McCord is a financial journalist with more than three decades experience writing and editing at global news wires including Bloomberg and AFP, as well as daily newspapers in Hong Kong, Sydney and Melbourne. He has covered some of the biggest breaking news events in recent years including the Enron scandal, the New York terrorist attacks and the Iraq War. He is based in the UK. You can tweet to Mark at @MarkMcC64371550.

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